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Cross docking spruces up Urban Outfitters.

KEN MCKINNEY, DIRECTOR OF DISTRIBUTION for apparel and home furnishing retailer Urban Outfitters, came to the conclusion that much of the stock coming into his warehouse wasn't moving efficiently. A fair amount of it arrived on the receiving dock pre-packed and didn't need to be broken out of the cartons, yet it was being handled the same way as the loose items. It was obvious to him that it was time to start cross docking.

Cross docking saves time and money by immediately routing inbound products to loading docks for outbound shipment, without the intermediate step of warehouse storage. For cross docking to work, the vendor must pack products in a form that's usable by the ultimate receiver.

Some of Urban Outfitters' inbound shipments fit the bill. "We recognized that the way some products come in, it was natural to put a label on it and get it from one door to the other without going through the whole process of opening and counting, ticketing, and distributing," McKinney says.

Because cross docking requires shippers to coordinate data for inbound shipments and outbound orders, the right information management system is critical. Urban Outfitters turned to Rockaway, N.J.-based AL Systems, which previously had provided the retailer's "put-to-light" system. That system reads bar codes on incoming merchandise to identify the stock-keeping units (SKU), triggering a light indicating into which shipping packages the operator should place those items.

AL Systems developed a program that tied into Urban Outfitters' upload/download protocol with its host system, allowing the software to match incoming merchandise with outgoing store orders. Now, when an inbound package is scanned, the program determines whether it is sent through the put-to-light area or is cross docked, and generates the appropriate label. "When we launch something in our cross dock, [the program] recognizes how many cartons are in the order and generates shipping labels for each store getting that product," McKinney says.

Not every incoming package lends itself to cross docking, of course. In some cases, the original packaging may not be strong enough for reshipment. For a product to qualify, moreover, it must be packed in such a way that every store, even those with the smallest orders, receives a full case. "If there are four units per case and Lawrence, Kansas, is the store getting the smallest amount, as long as they get four and every other store then gets multiples of four, that's the criterion," McKinney explains.

Things don't always go as smoothly as McKinney would like. For instance, occasionally an order that isn't suitable is selected for cross docking. "It's usually a function of how the vendor prepared it," he says. "For example, if we're expecting all pre-packs for an apparel item and the order comes in half pre-pack and half loose, we can cross dock the pre-pack component but we have to send the loose through our regular system."

Those sorts of hiccups aside, McKinney says, his company is already seeing the benefits of cross docking. "It eliminates the opening and counting," he says. "And we're saving on cartons because in our packing area we use our own, but here we're able to use the vendor's carton by putting a label on it."

McKinney also expects that cross docking will reduce labor costs. He estimates that for every 10 percent of inbound merchandise that's cross docked, the distribution center could reduce staffing by one or more people.

Right now, Urban Outfitters cross docks 4 to 5 percent of its incoming stock, and McKinney's goal is to raise that to at least 10 percent. He believes that educating the company's buyers about the benefits of cross docking for the stores will make that goal reachable. "It gets their goods into the stores more quickly," he says. "In addition to the cost factor, the normal turn through here is two to three days. [With cross docking] we can get it out next day or same day if it comes in early enough."
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Title Annotation:Case study: Urban Outfitters
Author:Shanahan, John
Publication:Logistics Management (Highlands Ranch, Co.)
Date:Jan 1, 2004
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